Dave Schuler reads that the formation of new businesses is definitely on the wane, and suggests a solution:
I think the solution to that problem is to lower the barriers to new business formation, to stop subsidizing large companies, and reduce the power and effectiveness of the tools, e.g. intellectual property law, that large companies exploit to beat down smaller upstarts. Unfortunately, I can’t see any enthusiasm for doing any of those things because all of them have powerful support constituencies.
Additionally, there used to be a dictum that big companies like to do business with big companies. I think that’s still true but I think it can be extended: big government likes to do business with big companies which prefer to do business with other big companies. In other words the larger and more powerful government becomes the more policy will tend to be oriented to favor large companies and the lower our rate of new business formation will become.
It might also help if big companies could get over their hormonal (or whatever) urge to get Even Bigger. Does anyone seriously believe that the Comcast/Time Warner Cable merger or the AT&T/DirecTV merger will accomplish anything worthwhile? At best, some people will see paper gains on their stock holdings, and most of them won’t see that much. (I expect about $11, based on my own muddled portfolio.) Certainly there’s no reason to think actual service will improve.